Linton v Bellaney - [2024] NZHC 490

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2023-409-379

[2024] NZHC 490

BETWEEN
ANDRE LUKE MCBRIDE LINTON

First Applicant

AND

ANDRE LUKE MCBRIDE LINTON and

MOLLY ANN LINTON as trustees of the Andrew and Molly Linton Family Trust Second Applicants

AND

NATURAL HEALTH CLINICS 1987 LIMITED

Third Applicant

AND

CLIFFORD FALCONER BELLANEY

First Respondent

AND

FLEX FX LIMITED

Second Respondent

AND

CLIFFORD FALCONER BELLANEY and KATHLEEN MARY FRANCIS GRAHAM

and JAW TRUSTEES LIMITED as trustees of the Skye Trust

Third Respondents

Hearing: On the papers

Counsel:

G A Cooper and E L Pearce for the Applicants

C R Johnstone and J Watson for the Respondents

Judgment:

8 March 2024

JUDGMENT OF HARLAND J

AS TO COSTS ON INTERIM INJUNCTION APPLICATION

LINTON v BELLANEY [2024] NZHC 490 [8 March 2024]

Introduction

[1]                 On 18 December 2023, I dismissed the applicants’ application for an interim injunction which sought to prevent the respondents from continuing to manufacture, market and supply certain natural health products which they submitted breached their intellectual property rights, was contrary to a restraint of trade clause in an agreement for sale and purchase of the shares in the third plaintiff company and which breached the Fair Trading Act 1986.1
[2]                 I indicated that costs should follow the event and made a timetable for the filing of memoranda dealing with that issue. I outlined that, thereafter, costs would be dealt with on the papers.2
[3]                 The respondents have since filed a memorandum outlining the costs they seek, the applicants have responded and the respondents have replied. This judgment determines costs, taking into account the matters raised in the memoranda.

The application for costs and opposition to it

[4] The respondents initially sought costs amounting to $41,108 and disbursements of $270. All were calculated in accordance with category 2B, with a daily rate of $2,390. Having considered the applicants’ reply memorandum, the respondents now seek costs in the sum of $33,938 with disbursements of $220.

[5] The applicants’ primary position is to oppose costs because they submit r 14.7 of the High Court Rules 2016 (HCR) applies. Mr Cooper submitted that r 14.7 extends to situations where a successful party’s conduct may disentitle it to costs. He submits that is the case here. Counsel for the applicants acknowledged that costs generally follow interlocutory applications under rr 14.2 and 14.8, but submits, citing Marx v Attorney-General, that where special circumstances exist, it is fairer to depart from the general rule that costs should follow the event.3
[6] Mr Cooper submitted, citing in particular rr 14.7(f) and 14.7(g), that the following matters are relevant to the Court’s assessment under r 14.7:

1 Linton v Bellaney [2023] NZHC 3761.
2 At [102].
3 Marx v Attorney-General [1974] 2 NZLR 372.

(a) the respondents’ conduct prior to the application being brought, particularly their response to the cease and desist letter;

(b) the requirement in the judgment that undertakings be provided by the respondents; and

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Linton v Bellaney

Details

AGLC: Linton v Bellaney [2024] NZHC 490
Case: [2024] NZHC 490
Decision Date: 8 March 2024

CaseChat Overview and Summary

In Linton v Bellaney, the applicants sought an interim injunction against the respondents to prevent them from manufacturing, marketing, and supplying certain natural health products. The applicants argued that these products breached their intellectual property rights, contravened a restraint of trade clause in an agreement for sale and purchase of shares in the third plaintiff company, and were in breach of the Fair Trading Act 1986. The High Court dismissed the application on 18 December 2023 and indicated that costs should follow the event, with a timetable set for the filing of memoranda dealing with the issue. The respondents subsequently filed a memorandum outlining the costs they sought, and the applicants responded, leading to this judgment determining the costs.

The respondents sought costs amounting to $41,108 and disbursements of $270, calculated according to category 2B, with a daily rate of $2,390. The applicants opposed the costs, arguing that rule 14.7 of the High Court Rules 2016 applied, which allows for the refusal or reduction of costs where a successful party’s conduct disentitles them to costs. The applicants cited several factors they believed warranted a reduction in costs, including the respondents’ conduct prior to the application being brought, their response to the cease and desist letter, and the subsequent breach of the undertakings provided at the interim injunction hearing. The applicants also challenged the quantum of the costs sought by the respondents.

The court considered the legal principles governing costs in interlocutory applications, noting that all matters relating to costs are at the discretion of the court and that costs generally follow the event. The court examined whether the conduct of the respondents constituted an exceptional circumstance that disentitled them to their claimed costs, considering the arguments made under rule 14.7 of the High Court Rules 2016. The court concluded that there were no special circumstances justifying a departure from the general rule that costs should follow the event. The court found that the fundamental difference in the nature of the products at issue was unlikely to have been resolved by the cease and desist letter, and that the respondents had acted responsibly in providing certain undertakings. The court also noted that the alleged breach of undertakings was irrelevant to the decision on costs in relation to the first interlocutory application.

The court then addressed the quantum of the costs sought by the respondents, considering the arguments raised by the applicants. The court found that the costs claimed by the respondents were justifiable and accepted some minor reductions proposed by the applicants. The court calculated the total costs properly claimable and ordered that the applicants pay the respondents costs in the sum of $32,504 and disbursements of $220.

Orders